O.M.W. Sprague (the Man Who “Wrote the Book” on Financial Crises) meets the Great Depression

Hugh Rockoff

Jahrbuch für Wirtschaftsgeschichte / Economic History Yearbook, 2022, vol. 63, issue 2, 527-557

Abstract: When the Great Depression struck the United States, O.M.W. Sprague was America’s foremost expert on financial crises. His History of Crises under the National Banking System is a frequently cited classic. Had he diagnosed a banking panic and called for an aggressive response by the Federal Reserve, it might have made a difference; but he did neither. Sprague’s misdiagnosis had, I argue, two causes. First, the crisis lacked the symptoms of a panic, such as high interest rates in the New York money market, which Sprague had identified from his studies of previous crises. Second, Sprague’s macro-economic ideas led him to conclude that increasing the stock of money would be of little help once a depression was underway. Sprague’s main concern was that abandoning the gold standard would intensify the crisis, a concern that led him to resign his position as advisor to the U.S. Treasury to protest Roosevelt’s gold policy.

Keywords: O.M.W. Sprague; Great Depression; banking panic; financial crises; Federal Reserve; Weltwirtschaftskrise; Bankenpanik; Finanzkrisen; Geldpolitik (search for similar items in EconPapers)
JEL-codes: B E G (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:bpj:jbwige:v:63:y:2022:i:2:p:527-557:n:7

DOI: 10.1515/jbwg-2022-0018

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